The Northwest Nevada economy is slated to continue growing from 2018 – 2019 as local leaders anticipate the region will continue capitalizing on its location, cost of doing business, and small but increasing efforts to re-brand its image to outsiders.
That’s according to the keynote speaker at the “Alliance Regional Business Expo and Economic Update” held in late January—a conference co-hosted by the Economic Development Authority of Western Nevada (EDAWN) and the Reno-Sparks Chamber of Commerce. EDAWN’s local research spotlights some intriguing viewpoints, trends and projections so your credit union can plan appropriately:
Northwest Nevada Economic Forecast
- The Reno-Sparks metropolitan area’s job base will rise nearly 5 percent in 2018. These two cities will end this year employing more than 241,000 individuals (or approximately 275,000 for the broader two-county region). In 2017 this two-city employment base (Reno-Sparks) surpassed its previous peak of 224,000 jobs in 2007. Additionally, the larger five-county region’s employment base is anticipated to rise from 390,000 jobs in January 2018 to 402,000 by January 2020. One interesting nugget: the gaming industry only accounts for 4 percent of local economic activity today (it was 25 percent in 2005).
- Local leaders hope to entice 2,500 jobs to the Reno-Sparks region in 2018, with half of them paying an hourly wage of $30 or more. This would be slightly lower than the 3,300 jobs attracted to the region in 2017 (13 of 29 companies from California)—in distribution, logistics, e-commerce, technology, aerospace, finance, manufacturing, and back-office operations. To put into context, prospecting visits from all types of out-of-state companies have risen from an average of four per month in 2011 to 10 per month in 2016 and 2017 (the actual total number for 2017 was 133).
- The larger five-county region’s population could rise more than 30 percent between now and 2035. Going from 610,000 residents today to approximately 810,000 within the next 18 years is a possibility given the population increase from 2000 – 2017 (from 470,000 to 610,000).
- Economic and workforce development in the Reno-Sparks region is increasingly focused on retaining companies and skilled talent, creating local entrepreneurs, and fostering technological business activities. Attracting companies from out of state is still a large part of EDAWN’ mission, but local leaders are diversifying their approach compared to a decade ago. They have discovered that: 1) The majority of new jobs come from the expansion of existing companies; 2) High-growth companies are being courted by outside communities; and 3) Efforts to keep existing companies also help attract out-of-state businesses through networking and other opportunities.
- “Very likely” announcements from nine out-of-state companies as to whether they will relocate to the Reno-Sparks region are currently pending. These businesses are in California, Florida, Nebraska, Wisconsin, and Georgia and include back-office operations, distribution, manufacturing, professional services, and e-commerce. While three out of the nine would bring their headquarter-offices to the region, all nine would collectively bring 1,360 jobs (whether relocated or open positions). Other “hot” prospects further down the list include 12 companies with a total job count of 3,830 that have made the local region a finalist in their decision-making process (businesses from California, Michigan, Colorado, Ohio, Georgia, Pennsylvania, Taiwan and Sweden).
- “Advanced manufacturing” and “high-tech entrepreneurialism” have become top priorities in local workforce development efforts—and so has attracting companies from the Bay Area region of California. In 2017 the region gained 182 new start-up jobs at 49 companies (about $58 million in new capital funding), many being high-tech oriented operations that chose the area as an alternative to the Bay Area/Silicon Valley. Capital raised by local start-ups barely hit $1 million in 2012 and has slowly grown every year since then. The two areas mentioned above include robotics, computer hardware operations, web coding, blockchain development, e-commerce, and other technology efforts.
- Tesla’s lithium-ion battery factory that’s under construction and partially operating will employ 6,500 workers by the end of 2018. Up to 10,000 employees are expected when the factory (located at the Tahoe-Reno Industrial Center in Storey County) is completed and fully functional. The existing structure has 5.4 million square feet of operational space and is about 30 percent finished.
- The Reno-Sparks region has just as many concerns as it does positive economic drivers of growth. They include affordable housing issues; commuter congestion on the main road to the Tahoe-Reno Industrial Center; downtown revitalization; branding and image of the community; and workforce development/talent attraction.
- On the housing front, some leaders are advocating for changing Nevada’s “reset upon sale” property tax model due to its deprecation of property tax over the long-term and what they feel translates into a lack of funding for local governments and schools. This would require a re-vote by the state’s legislature.
- Interstate 80 is congested at key times during the week, causing accidents and commuting delays—and it’s the only main route for workers traveling to large industrial centers. Some leaders feel a fix is warranted. This would need major funding (whether local/state/federal government and private), as well as consensus from residents and leaders in the region that the issue is enough of a top priority to send a message to lawmakers. About 75 percent of employees traveling to the Tahoe-Reno Industrial Center live north of Interstate 80 in the Reno-Sparks vicinity.
- Some local leaders feel Reno in particular needs re-branded to show its potential future, not its mixed past. “Our poor ranking in education, human trafficking and ‘adult businesses’ that we allow throughout our downtown are hurting us when it comes to talent attraction and technology companies,” stated the keynote speaker of the economic forecast event. A collaborative effort would have to be made to “brag” about the region’s potential, as well as existing opportunities many companies and residents have been enjoying over the past 5 – 10 years.
- Like many communities across the nation, the Reno-Sparks region’s housing demand is outpacing housing supply. Not only is it driving up home prices, it’s forcing-out low income citizens, increasing homelessness, and driving up traffic as some residents look to outer spheres to live and commute to work. The 10-year average number of housing units built from 2007 – 2017 was 1,890 units (versus a much better 4,950 units during 1997 – 2007). That means today there is a housing shortage of 11,000 units. The median home price in the Reno-Sparks area rose from a low of $145,000 in 2012 to $350,000 by mid-2017, and average rental prices jumped from $810/month to $1,205/month during the same period.
- Nearly 89,200 housing units have been planned by builders and communities in the combined Reno-Sparks and Carson City-Lake Tahoe regions. But over the past several years, only 43,300 have been approved. Obtaining local approval is becoming difficult in some areas. Reno’s housing approval rate is 33 percent; Sparks is 55 percent; and Fernley/Dayton is 77 percent. Some ideas to jumpstart the homebuilding/civic approval process include government financing, supportive zoning, fee reductions and waivers, donated or low-cost government land, local government accelerated approvals, approving cheaper lots, building smaller/simpler units, and private-sector financing assistance.
Residents, Jobs, Taxes and Trends
The Economic Planning Indicator Committee (EPIC) at EDAWN took a look into the five-county region’s potential future (2015 – 2019) a few years ago to forecast how many jobs, residents and households will potentially be located in the larger Reno-Sparks-Carson City area based on current and anticipated growth trends.
Future tax revenues, land-use patterns, economic activity and other demographics are included below, as well as some interesting “leading economic indicators” and local industry trends from EKAY Economic Consultants:
- EPIC Growth Study Map (showing comprehensive business and residential demographics for each county in the region)
Demographic Profile and Projections: Washoe County and Carson City combined*
- Total population: 516,000 (and will hit 587,000 by 2025)
- Working-age individuals (15 - 64 years old): 66 percent of total population in 2015 (and will fall to 64 percent by 2025)
- Labor force (at least 16 years old who are working/looking for a job): 264,000 out of 416,000 adult population
- Labor force participation rate (adults who “want” to work): 63 percent (or 264,000 individuals)
- Unemployment rate: 4.2 percent (versus 5 in NV and 4.1 in U.S.)
- Unemployed workers: 11,000
- Median household income: $57,000 as of 2017 (compared to $55,400 for NV and $60,000 for U.S.)
- Poverty rate: 13 percent (versus 13.8 in NV and 12.7 in U.S.)
- Education of population: 29 percent have a college degree; 34 percent some college; 24 percent high school diploma; and 13 percent no high school diploma